The Digital Markets, Competition and Consumers Act 2024 (DMCCA) came into force on 24 May 2024 with the intention of expanding the investigation and enforcement powers of the Competition Markets Authority (CMA). The intention behind this expansion is to raise the CMA’s awareness and influence in a digital age where records and/or other information is digitally stored by market players.

Why?

The new DMCCA therefore shoulders the difficult task of defining and characterising what is considered ‘digital activities.’ The law as it enacted prescribes the following:

• The provision of a service by means of the internet, whether for consideration or otherwise;
• The provision of one or more pieces of digital content, whether for consideration or otherwise;
• Any other activity carried out for the purposes of an activity within [points a. and b.].

Understandably, the definitions are broad, and in hoping to define what is meant by a service provided by means of the internet, it has been decided that such a service can be provided even where it is provided through a combination of the internet or other electronic communications service.

What powers?

The CMA now has the power to designate certain businesses as having strategic market status (SMS) within the UK, in respect of the provision of digital services. That designation must, however, follow strict investigatory steps, for example the provision of an SMS investigation notice. There are specific requirements in respect of such a notice (such as a statement of the purpose and scope of that investigation) and businesses should seek legal advice as soon as possible if they have concerns in respect of the validity of an SMS notice.

Rather importantly, where such a notice is issued, the CMA are required to publish that notice and pass the notice to other regulators, such as the Financial Conduct Authority (FCA), OFCOM, and the Information Commissioner.

A designation renders an undertaking or business subject to the CMA’s power to impose conduct requirements (which are requirements as to how the business must conduct itself with regards to digital activity), power to launch a conduct investigation, power to issue enforcement orders, and the power to make pro-competitive interventions. Such an intervention may take the form of one or both of the below:

1. An order imposing on the designated undertaking requirements as to how the undertaking must conduct itself, in relation to the relevant digital activity or otherwise (a "pro-competition order; and/or
2. Recommendations made by the CMA to any person exercising functions of a public nature about steps which the CMA considers the person ought to take in respect of the designated undertaking or the digital activity, or otherwise.

Amendments to the Competition Act 1988 (CA) place duties on any person who knows or suspects that an investigation by the CMA into anti-competitive behaviours is being or might be carried out to preserve documents which they know or suspect to be relevant to that investigation. How it will be enforced and/or proven as to whether a person knew or suspected that a document might be relevant to an investigation will be interesting.

Further amendments to section 28(2)(f) of the CA authorise CMA officers to require any information “which is stored in any electronic form” and which is accessible from the premises to be produced in a way that can be removed from the premises and in a form that is visible and legible or from which it can be produced in a visible and legible form. The latter requirement of the information being ‘visible and legible’ may offer some difficulty in high volumes of numerical data, where the electronic data may require company or business software to analyse or format.

All these powers are designed to enhance and bolster the CMA’s armoury when conducting an unannounced inspection, otherwise referred to as “dawn raids.” To conduct a dawn raid, the CMA must obtain a warrant to do so; however, once that warrant has been issued all the new powers of production contained within the new DMCCA are designed to ensure that there is no stone unturned at the premises. The new DMCCA also extends the powers of the CMA to “seize and sift” to domestic premises, meaning that raids can happen not only at a business’s commercial premises, but also (subject to a warrant) at relevant domestic premises (e.g., director’s homes).

The DMCCA also strengthens the CMA’s powers to undertake compulsory interviews under caution. Historically, a person must be connected to a business under investigation before they can be compelled to give an interview; however, the DMCCA removes the requirement for that person to be connected to a business.

What can you do?

In the event that you become subject to CMA scrutiny and/or have been subject to a dawn raid, as a business it is vital that you seek legal advice as to the implications of that scrutiny. Often businesses will try to engage with their regulator (be it the CMA or some other regulator) without fully appreciating the nature of the investigation they are undergoing. Competition principles and the economic rational for competition and its benefits to consumers makes it difficult for business to realise when they are potentially at risk of sanctions and/or an adverse finding from the CMA.

Investigations are sensitive situations and must be managed and handled accordingly with professional assistance to ensure that those investigating officers adhere to the scope of their investigation, as it was explained to the undertaking under investigation.